Loyalty and mortgage renewals don't mix!

When it comes to renewing your mortgage with your current financial institution, those loyal customers that simply sign on the dotted line often don't get the best deal according to a paper published by the Bank of Canada. A recent article in the star.com personal finance section states that "you’d think that loyalty would work in your favour — the more services you have with a bank, the better the deal. But, that’s not true".

The article goes on to say the "study also found that mortgage brokers find the best rates. Mortgage brokers are paid by the lender, not the customer, but aren’t confined to one lender’s products. Their business is very competitive, so the pressure to find the very best rates is high. The study noted that brokers “are a significant factor driving discounts,” reducing the cost of a mortgage on average by 17.5 basis points."

For me, this is nothing new; Mortgage Brokers do have excellent rates and help many consumers to negotiate a lower rate with their current lending institution.  I've seen this go on for years. It never fails: a customer calls me explaining that they are up for renewal at their current bank and then they proceed to read off the rates they've been offered. They are almost ALWAYS higher than what I can quote them. It's pretty amazing what happens next! The customer then contacts their bank and tells them they've spoken with a Mortgage Broker that has excellent mortgage rates. The bank then usually lowers their rate to accommodate the customer.
The problem with this is twofold. One, a loyal customer should not have to work that hard to get a competitive rate at their bank. Second, if customers continue to use Mortgage Brokers simply to negotiate a better rate at their bank the mortgage broker channel will become unsustainable. Why should you, the consumer, care about that?

If we become unsustainable and go out of business then consumers will go back to paying much higher mortgage rates at the banks due to decreased competition.

Mortgage brokers work very hard to provide consumers with competitive mortgage rates and independent choices.  So, the next time you're up for renewal and a Mortgage Broker offers you an excellent rate, give that broker your mortgage business instead of running back to your bank and rewarding their poor customer service with your loyalty!


  1. Excellent post Natalie. I always laugh while walking into my personal CIBC branch & see their posted rates. They're usually .75% higher than the great rates you provide. Many of my buyers say the same thing. Once they approach the bank, talk to the "manager", maybe they'll match. Hows that for loyalty when you have to haggle to get a better deal? Personally, I've moved away from going to my bank for a mortgage & have since used the resources of an awesome mortgage broker....like you!


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